Prospectus Summary
PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes thereto and the information set forth under the sections “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in each case included in this prospectus. Unless the context otherwise requires, we use the terms “Ruckus,” “company,” “we,” “us” and “our” in this prospectus to refer to Ruckus Wireless, Inc. and, where appropriate, our consolidated subsidiaries.Company Overview
Ruckus is a leading provider of carrier-class Wi-Fi solutions. Our solutions, which we call Smart Wi-Fi, are used by service providers and enterprises to solve network capacity and coverage challenges associated with the rapidly increasing traffic and number of users on wireless networks. Our Smart Wi-Fi solutions offer carrier-class enhanced reliability, consistent performance, extended range and massive scalability. Our products include gateways, controllers and access points. These products incorporate our proprietary technologies, including Smart Radio, Smart QoS, Smart Mesh, SmartCell and Smart Scaling, to enable high performance in a variety of challenging operating conditions faced by service providers and enterprises.
We sell our products to service providers and enterprises globally and have sold our products to over 16,000 end-customers worldwide. We added over 4,400 new end-customers in the first half of 2012. We sell to enterprises through a worldwide network of more than 5,300 value-added resellers and distributors, which we refer to as our channel partners. Our enterprise end-customers are typically mid-sized organizations in a variety of industries, including hospitality, education, healthcare, warehousing and logistics, corporate enterprise, retail, state and local government and public venues, such as stadiums, convention centers, airports and major outdoor public areas. We also sell directly and indirectly to a range of service providers, including mobile operators, cable companies, wholesale operators and fixed-line carriers. We have over 45 service provider end-customers, including Bright House Networks, The Cloud (a BSkyB Company), KDDI, Tikona Digital Networks, Time Warner Cable and Towerstream.
Our revenue increased 98%, from $47.4 million for the first half of 2011 to $93.9 million for the first half of 2012. Our revenue increased from $44.4 million in 2009 to $75.5 million in 2010 and to $120.0 million in 2011, representing a compound annual growth rate of 64%. Our performance improved from a net loss of $0.9 million for the first half of 2011 to net income of $24.4 million for the first half of 2012, which included $17.4 million of income related to the release of the valuation allowance on our net deferred tax assets. Our performance improved from a net loss of $10.0 million in 2009 to a net loss of $4.4 million in 2010 and to a net income of $4.2 million in 2011.
Industry Background
The increased adoption and use of mobile devices, such as smartphones, tablets and laptops, is causing significant growth in wireless traffic. Mobile users expect to be able to connect to wireless networks for work, personal communications and entertainment from virtually anywhere and at anytime. As a result, mobile service providers and enterprises are struggling to address both the increased demands on their networks and the significant investment required to upgrade network capacity and provide ubiquitous wireless connectivity.
These capacity and coverage challenges will continue to escalate as users increase their use of mobile devices and access bandwidth-intensive and latency-sensitive applications, such as those for viewing streaming multimedia, video conferencing, downloading video content, viewing and sharing photos and interactive social media. The heaviest demands tend to be clustered in high density metropolitan areas and public venues during peak usage hours when many users are trying to access the network at the same time. Service providers and enterprises need solutions that meet these capacity and coverage demands.
According to Signals Research Group, mobile data traffic in the United States alone is expected to grow between 53x and 153x from 2010 to 2020. To meet this demand, mobile service providers are adding macro network capacity by increasing cell site density, investing in new cellular technology, such as long term evolution, or LTE and LTE Advanced, and acquiring additional spectrum. However, Signals Research Group also projects that U.S. cellular network capacity will grow by only approximately 25x over the same time period. There will therefore be a significant gap between the expected traffic volume and the expected capacity of conventional cellular infrastructure in the United States. While this capacity gap is significant in itself, it actually does not factor in capacity deficits outside the United States or the peak usage demands that must be considered when designing and upgrading networks.
As a result of this capacity gap, mobile service providers must find new ways to inject capacity into their wireless networks. The capacity gap is also opening up new business opportunities for other service providers, such as cable companies, wholesale operators and fixed-line carriers, to add reliable wireless access services to their traditional access services.
Capacity challenges are also experienced by enterprises in a variety of industries, including hospitality, education, healthcare, warehousing and logistics, corporate enterprise, retail, state and local government and public venues, such as stadiums, convention centers, airports and major outdoor public areas. In addition to significant traffic growth, these enterprises experience widely fluctuating network load, both in number of users and amount of traffic, and are faced with a range of operating conditions. These enterprises also typically do not have sufficient IT staff to cost-effectively address these issues. Enterprises thus need wireless solutions that are reliable and easy to manage.
Wi-Fi is a conceptually attractive solution to increase capacity, improve wireless network performance, expand coverage footprint, deliver new services and better accommodate traffic growth. Mobile devices are increasingly equipped with Wi-Fi, and many devices now rely on Wi-Fi as their primary Internet connection. Wi-Fi also operates over an unlicensed, widely available spectrum and functions well both indoors and outdoors. However, the ability of service providers and enterprises to deliver robust and pervasive connectivity over Wi-Fi has been constrained by the limitations of what we refer to as basic, or conventional, Wi-Fi technology.
Wi-Fi standards and Wi-Fi network equipment were originally designed to allow simple, easy-to-use and low cost connectivity in the lower interference environment of the home. As a result, basic Wi-Fi products suffer from a number of inadequacies for addressing today’s wireless challenges. These include an inability to handle interference in crowded circumstances, degradation in performance under load, inconsistent coverage as users move around while connected to the network and an inability to deliver rich content such as voice over IP, or VoIP, without choppy or interrupted transmission. In addition, basic Wi-Fi does not provide service providers needed integration with their existing networks, adequate scalability for the hundreds of thousands of access points required and the extensible and flexible platform needed to offer new revenue-generating services and applications.
To address the increasing capacity and coverage challenges, service providers and enterprises need a new class of Wi-Fi that offers enhanced reliability, consistent performance, extended range and massive scalability. We refer to this as carrier-class Wi-Fi. Carrier-class Wi-Fi combines the cost and ease of use benefits offered by basic Wi-Fi technology with an advanced level of adaptability, performance and integration with existing networks that addresses the challenges faced by service providers and enterprises.
According to Infonetics Research, Inc., or Infonetics, the market for Wi-Fi solutions for carriers is expected to grow from $296 million in 2011 to $2.8 billion in 2016, representing a 57% compound annual growth rate. According to Gartner, Inc., or Gartner, the market for Wi-Fi networking solutions for enterprises is expected to grow from $3.4 billion in 2011 to $6.9 billion in 2016, representing a 15% compound annual growth rate. Carrier-class Wi-Fi addresses the needs of both of these markets.
Our Solution
Our carrier-class Smart Wi-Fi solutions enable service providers and enterprises to benefit from advanced levels of performance and integration capabilities that are not possible with basic Wi-Fi. We offer a wide-range of Smart Wi-Fi products, including a number of advanced Wi-Fi controllers and gateways, a broad portfolio of indoor and outdoor access points and Wi-Fi infrastructure management software. These products incorporate our proprietary technologies, including:
Our solutions deliver the following benefits for both service providers and enterprises:
Our solutions provide the following benefits to meet the additional needs of service providers:
capability enables service providers to improve subscriber ease of use and enhance the revenue opportunity by incorporating Wi-Fi usage into their service offerings and subscriber data plans;
Our Strategy
Our goal is to lead and expand the market for carrier-class Wi-Fi networking solutions. The key elements of our growth strategy are:
Risk Factors Summary
Our business is subject to numerous risks and uncertainties, including those highlighted in the section entitled “Risk Factors” immediately following this prospectus summary. These risks include, among others, the following:
current or potential competitors have longer operating histories, greater brand recognition, larger customer bases and significantly greater resources than we do, and we may lack sufficient financial or other resources to maintain or improve our competitive position;
Our Corporate Information
We were incorporated in 2002 in Delaware as Sceos Technologies, Inc. and subsequently changed our name to Video54 Technologies, Inc. and then to Ruckus Wireless, Inc. We effectively commenced operations on June 1, 2004, when a new board of directors was appointed and senior management was hired. Our headquarters are located at 350 West Java Drive, Sunnyvale, California 94089 and our telephone number is (650) 265-4200. Our website address is www.ruckuswireless.com. The information contained on, or that can be accessed through, our website is not part of, and is not incorporated into, this prospectus.
“Ruckus Wireless,” the Ruckus logos and other trademarks or service marks of Ruckus Wireless, Inc. appearing in this prospectus are the property of Ruckus Wireless, Inc. This prospectus contains additional trade names, trademarks and service marks of others, which are the property of their respective owners. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies.
We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.0 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, or (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.